Windows 7 Consumer Upgrade Limited to 25 PCs

Microsoft's new Windows 7 "upgrade option program" for consumers and small businesses has a catch: the offer is restricted to buying 25 PCs or less.

Microsoft unveiled its pricing and promotions for Windows 7 last week, along with the upgrade option program. It's similar to a "technology guarantee" program rolled out when Windows Vista first appeared on the market. The new upgrade option ends for U.S. and Canadian buyers on July 11.

The idea behind both programs is to offer a free operating system upgrade as an incentive for consumers and small business buyers of new PCs, even as a new Windows operating system enters the market. It's anticipated that Windows 7 will be released to the public on Oct. 22.

The 25-PC restriction was not well publicized when Microsoft first disclosed the Windows 7 upgrade option program. Michael Silver, vice president and research director at Gartner, pointed out this restriction in a Gartner "news analysis" article, which lays out some purchasing strategies.

Silver noted that a loophole may exist when buying PCs from some original equipment manufacturers. OEMs sometimes have their own upgrade programs that make exceptions compared with Microsoft's policy, he explained.

I checked with Dell on the 25-PC restriction via an online chat with a salesperson. The Dell sales agent suggested that there isn't a limit on the number of PCs purchased. However, a ZDNetblog by Adrian Kingsley-Hughes got a different response from Dell.

"The number of Dell Windows 7 Upgrade kits allowed to any one customer is capped at 25 per physical address. Customers with more than 25 PCs are encouraged to pursue Volume Licensing," Dell stated, according to that blog.

A Microsoft spokesperson confirmed the 25-PC purchase limit for those taking advantage of the Windows 7 upgrade option program. Beyond that quantity, the spokesperson pointed to Software Assurance, which is an option in Microsoft's Volume Licensing program. Software Assurance participants can get software upgrades within a three-year term.

Silver noted that Microsoft actually expanded the new PC purchase limit, which was five PCs under the Vista technology guarantee program. Still, he suggested the limit was there mostly to direct organizations toward purchasing options like Software Assurance.

"Gartner believes that Microsoft designs these program limitations to persuade organizations to enter Enterprise Agreements, enroll licenses in Software Assurance or purchase upgrades to obtain rights to run Windows 7," Silver wrote.

Microsoft's upgrade option program is directed at consumers and small businesses that typically might not buy Volume Licensing. As for enterprises and large companies, most still use Windows XP. The issue for many larger organizations still reliant on XP to support legacy applications is how to buy new PCs that will have a downgrade option to Windows XP.

Microsoft announced its Windows 7 downgrade policy earlier this month. Those buying higher priced editions of Windows 7, such as Professional or Ultimate, can downgrade to the XP Professional edition only, provided that the PCs get purchased before approximately April 22, 2011.

The date is approximate because the XP downgrade right is only available to Windows 7 buyers until Service Pack 1 becomes available (if one is released), or 18 months from the Windows 7 general release date of Oct. 22, whichever comes first.

If all of that sounds confusing and hard to track, Microsoft probably has a solution for you. It's called Software Assurance with Volume Licensing. Software Assurance licensees can downgrade to XP anytime within that three-year licensing option.